Aave Eyes Bitcoin Move to Capitalize on Emerging DeFi Narrative

• Aave is eying a move to Bitcoin.
• The leading decentralized lending protocol has asserted that the move could offer several benefits.
• Aave has tipped its chain of choice as “the first fully decentralized EVM-equivalent Bitcoin Layer 2.”

With a market capitalization of nearly $2 trillion, Bitcoin is undoubtedly the largest crypto asset by market cap. Still, for most core crypto natives, the true potential of this deep liquidity has yet to be unlocked due to the network’s limited programmability, which has, in turn, limited DeFi applications—or at least that has been the narrative until now.

With the launch of Bitcoin scaling solutions , new frontiers appear to be opening up on the OG blockchain, and leading DeFi projects are looking to capitalize.

Aave Sets Sights on Bitcoin Liquidity 

Aave is eying a move to Bitcoin. On Wednesday, November 13, leading Aave contributors Aave-Chan Initiative (ACI) submitted a “temperature check” proposal to gauge the community’s interest in launching the protocol on Spiderchain, an EVM -compatible Bitcoin Layer 2 , to capitalize on the emerging DeFi narrative on the OG blockchain.

ACI argued that the move could benefit Aave in several ways. These potential benefits include gaining an early mover advantage within the nascent Bitcoin DeFi space, attracting new users, including Bitcoin whales , and expanding the reach of its USD stablecoin GHO.

So, why Spiderchain?

“The First Fully Decentralized EVM-Equivalent Layer 2 on Bitcoin”

In the proposal, ACI asserted that Spiderchain was “the first fully decentralized EVM-equivalent Layer 2 on Bitcoin.” Spiderchain will use a Proof-of-Stake (PoS) consensus mechanism where stakes are stored in “a distributed network of decentralized multisigs safeguarded by a randomized subset of participants.” The network is also billed to launch with a decentralized sequencer.

ACI argues that Spiderchain’s decentralized nature reduces the risk Aave takes by supporting the network’s wrapped Bitcoin token as collateral.

Beyond Spiderchain’s decentralized nature, ACI also hailed its performance and “built out” DeFi ecosystem. Spiderchain boasts five-second block times and average fees of $0.01. At the same time, the network is expected to launch with about 40 DApps , including protocols like Frax and Kiln.

If the temperature check proposal to deploy on Spiderchain receives enough support, ACI will follow up with a more detailed proposal for the Aave community’s consideration. So far, most community members appear to favor the move.

On the Flipside

• Aave’s Spiderchain move is still in the early discussion phase.

Why This Matters 

Aave is TVL’s largest DeFi lending protocol. The project’s interest in Spiderchain highlights the growing interest in Bitcoin’s nascent DeFi ecosystem.

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